PLXS — Plexus Corp.

Plexus Holdings (PLXS) Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue: $1.058 billion, near the high end of guidance, marking the third consecutive quarter of sequential growth.
• Non-GAAP EPS: $2.14, significantly exceeding guidance due to favorable tax items; represented a 30% increase year-over-year.
• Non-GAAP Operating Margin: 5.8%, a 40 basis point expansion compared to FY 2024.
• Free Cash Flow: $97 million for Q4, totaling $154 million for FY 2025, exceeding projections. Cumulative free cash flow over the past two years reached $495 million.
• Return on Invested Capital (ROIC): 14.6%, up 570 basis points from the weighted average cost of capital.

2. Strategic Updates and Business Highlights

• New Program Wins: Secured 28 new manufacturing programs worth $274 million in annual revenue; total of 141 wins in FY 2025, representing $941 million in annualized revenue.
• Market Sector Performance:
  • Aerospace and Defense: Revenue decreased 6% sequentially due to program delays, but strong wins were noted, particularly in unmanned aircraft.
  • Healthcare/Life Sciences: 1% revenue growth in Q4, with a 5% increase for FY 2025 driven by imaging and monitoring sectors.
  • Industrial: 11% sequential growth in Q4, with strong performance in semi-cap and energy subsectors.
• Sustainability Initiatives: Achieved significant waste reduction and community engagement, including over 32,000 volunteer hours and $1.4 million in donations.

3. Forward Guidance and Outlook

• Q1 FY 2026 Guidance: Revenue expected between $1.05 billion and $1.09 billion, with non-GAAP EPS of $1.66 to $1.81. Non-GAAP operating margin projected between 5.6% and 6.0%.
• FY 2026 Expectations: Anticipated revenue growth exceeding end market growth, aiming for 9% to 12% revenue growth, with continued investment in talent and technology to enhance operational efficiency.

4. Bad News, Challenges, or Points of Concern

• Aerospace and Defense Sector: Experienced minor delays in new program transitions, leading to a 6% sequential revenue decline in Q4. The sector's revenue for FY 2025 was flat due to product launch delays.
• Market Visibility: While current customer conversations indicate stability, potential impacts from government shutdowns and geopolitical factors remain a concern.
• Investment Impact: Near-term margin pressure expected due to ongoing investments in new facilities and automation, particularly in Malaysia, which may initially drag profitability.

5. Notable Q&A Insights

• Customer Confidence: Management expressed increased confidence in growth trajectory, supported by new program ramps and modest improvements in end markets.
• AI Opportunities: Discussed potential in AI applications, particularly in healthcare and power generation, while avoiding commoditized compute markets.
• Semi-Cap Sector Outlook: Expected to maintain low double-digit growth driven by market share gains despite modest overall WFE growth projections.
• Defense Sector Growth: Anticipated strong growth in defense, supported by new wins and investments in technology and cybersecurity to enhance competitiveness.
• Inventory Management: The healthcare sector's recent strength attributed to the resolution of inventory overhangs, alongside new program ramps.

Overall, Plexus demonstrated strong financial performance in FY 2025, with positive momentum heading into FY 2026, despite some challenges in specific sectors and ongoing investments impacting near-term margins.